Businesses in the South West have reacted to Chancellor Jeremy Hunt’s Autumn Statement by warning that more needs to be done to increase confidence while recognising the need to focus on financial stability and welcoming plans to invest in Britain’s potential as a Science Superpower.
Devon & Plymouth Chamber of Commerce welcomed support on business rates and investment in innovation – but warned this could be undermined by reducing access to research & development tax credits.
There was stark mention of Devon, Plymouth and the wider South West, though the previous plan to include Plymouth as an Investment Zone alongside the R&D-focused Plymouth and South Devon Freeport appeared to match the Chancellor’s vision for Britain to be a world leader in innovation.
Stuart Elford, CEO of Devon & Plymouth Chamber, said: “This is a difficult budget for difficult times and we appreciate that the Chancellor had to recoup some of the difficult losses that have been made since the mini-budget. It seems like the public sector bears a lot of the brunt of that.
“There was scant mention of the South West, although there are a few causes for optimism. There was a lot around research and development, and there was mention that the investment zones will continue.
“That is potentially good news for Plymouth, because although it wasn’t specifically mentioned, investment zones previously have been indicated that they are most likely to go next to Freeports, and we of course have a Freeport. Our Freeport is predicated on research, development and innovation more than international trade like other Freeports.”
On business rates:
“The Chancellor has said that the re-evaluation of business rates is going to continue, and that will go ahead in April 2023. He has announced a £13.6bn package of support for transitioning for businesses. The devil will be in the detail of that.
Until we know exactly who that goes to and what it’s to cover, we won’t really know. But we do appreciate that had to happen at some stage, and it is right that people pay fair rates.”
“I was actually pleased to see that the Chancellor is looking at long-term strategy for energy independence. We can’t be beholden on other countries for our energy. That is only going to cause this problem again in the future when there’s any other global instability. So, that in itself was a good thing.
“The worry for businesses is the cost of energy at the moment, and Mr Hunt is saying that business support for energy will continue beyond April next year, so that is good, although he says it tapers. Business energy costs are already too high – 4% of businesses say that they will be unable to pay their energy bills in April 2023, so that is terrifying. For Devon alone, that equates to 2,500 businesses.”
Reaction from business leaders
At an event organised by Devon & Plymouth Chamber, in partnership with Westcotts Chartered Accountants & Business Advisers, to review the impact of the Chancellor’s fiscal statement, county business leaders gathered to react to the news as it developed.
Financial and tax reaction:
Shona Godefrey, Managing Partner at Westcotts, which has offices throughout the region, said: “There wasn’t much in today’s Autumn Statement that we weren’t already expecting. There were a lot of freezes and reviews – we knew there would be tax rises and we knew there would be spending cuts and that’s what we got.”
Mark Tibberts, Partner at Westcotts, specialising in tax advice, said: “This was a budget with no real surprises – the changes to Capital Gains Tax will be of huge relief to many but as asset values recover and increase over the next five or six years, more and more estates will be liable to inheritance tax in view of the freezing of the nil rate band at £325,000 until 2028.
“The focus on innovation to try to help the economy is an interesting one. To do this while hitting research and development tax credits is a difficult balancing act.”
Small business reaction:
Jonathan Keable, Chairman of Plymouth Federation of Small Businesses, said: “Small businesses will be disappointed to see that there is nothing to encourage them to take on new staff. Only 9% of businesses over the past quarter have felt brave enough to do so – giving them the confidence to do so would have a huge impact on regional economies underpinned by small businesses.
“Equally, it would have been an easy fix to help businesses suffering from late payments. Up to 50,000 go out of business every year due to late payments – reducing this risk would have an instant effect on confidence.
“On education, support for schools is welcome but we desperately need measures to help earlier intervention to support children’s learning before they reach school. A generation of ‘Covid children’ have lacked the early years support so vital to their development. Focus on further and higher education is welcome but we’re not curing the problem unless we help under-fives who will eventually become 16-plus with the communication skills needed to enter business.”
Property sector reaction:
Olivia Boulting, Area Manager of Auction House South West, said: “The freeze in income tax is certainly going to affect landlords with smaller to medium sized portfolios and have a knock on effect of a surplus of properties coming to the market as landlords offload their stock – combined with increased financial pressure on tenants’ likely to have less money to spend on rent. Overall, the housing market is likely to become more price sensitive which is what we’re already starting to see.”
Matt Cook, Head of Commercial at Bright Solicitors, said: “One of the things we were really hoping to see was stability – that came right from the outset and we hope this will give our clients confidence particularly in transactions.
“I was slightly surprised with the news on Capital Gains Tax, I think that will be positive as I don’t think the rates changes for personal allowances will have a significant effect.”